The trade group formed this year to represent the private equity industry released a statement on Thursday addressing the legislation on the way from Charles Rangel (D-NY), chairman of the House Ways and Means Committee.

For those just tuning in, a carried interest tax hike will be included in a wide-ranging tax bill scheduled to be unveiled by the House’s top tax writer, Ways and Means Committee Chairman Charles Rangel, sources told Reuters on Wednesday.

The measure would more than double taxes on the profits private investment fund managers make. But it looks like an uphill climb for final passage of the measure, Reuters reported, with skeptics saying it will die in the Senate.

Here’s what the trade group, the Private Equity Council, has to say on the matter.  This is turning into one heck of a lobbying battle.

“Private equity has helped power growth in the economy and made scores of companies more competitive.  Ernst & Young recently reported that private equity investment results in stronger businesses that significantly outperform their equivalents in the public sector.  Congress should not raise private equity taxes by 130 percent and create the risk that some of the benefits of this economic activity could be discouraged.   
 
“Leading European countries, including the United Kingdom, France, Ireland, and Spain, tax carried interest as a capital gain. By heading the other direction, Congress would put U.S. investment firms at a competitive disadvantage, risking a migration of investment in U.S. businesses to jurisdictions with more hospitable tax climates. 
 
“The proposal would undo decades of established partnership tax law and create a new standard that  reserves capital gains rates only for those with the wherewithal to invest equity into an enterprise.  Meanwhile, those partners who invest their time and effort to add value to an asset they own - the very people who often are mainly responsible for any capital gains generated — would be taxed at ordinary rates.  We do not believe that is an equitable outcome.” 
 
The National Venture Capital Association put out a similar statement on Thursday, calling the current capital gains tax treatment on venture capital  ”the right tax and public policy.” It goes on to say that this measure will “likely have negative implications for the start-up companies that fuel America’s economic growth.”

(Photo. Charles Rangel, Reuters file)